Sheffield Incubator Gains Critical Financing

By Tom Walsh

The Rhode Island Commerce Corporation on Monday, Nov. 21, approved the final piece of a financing package needed to transform the former Sheffield Elementary School on Broadway in the city’s North End into the Innovate- Newport business incubator.

The move will make $2,128,123 in Rebuild Rhode Island tax credits available for the proposed $7.1 million project, a collaboration involving the City of Newport, the Newport County Chamber of Commerce, and the Economic Development Fund of Rhode Island (EDFRI). The credits will be issued over five years.

“Refitting one of Newport’s most historic buildings for a modern and practical purpose is symbolic of the advances happening across Rhode Island at the moment,” said the state’s Secretary of Commerce Stefan Pryor in a statement. “Preparing our state and our businesses for an economy of the future, while maintaining and preserving the history and progress of our past generations, is a sign of things to come for many of our communities.”

The Commerce Corporation was formerly known as the Rhode Island Economic Development Corporation (RIEDC) until it was charged by the federal Securities and Exchange Commission with defrauding investors in the 2013 startup of former Boston Red Sox pitcher Curt Schilling’s ill-fated 38 Studios video game company. The agency was renamed in early 2014. Since then, steps have been taken to ensure there can be no repeat of the 38 Studios debacle.

The Sheffield project is expected to create 108 new jobs.

“Job creation is a critical part of these projects receiving financial assistance,” said state Senate President Teresa Paiva Weed, D-Newport. “And that’s the hope here.”

She said the former Sheffield Elementary School incubator is one of three vital North End economic development projects in Newport. The others involve the redesign of the Pell Bridge ramps to free up land for redevelopment, and re-purposing the former U.S. Navy hospital property.

“Doing these projects will fulfill the vision we have had for so long,” Paiva Weed said. “A number of us have been advocating for the North End for years.” She added that the projects are similar in that all three require a commitment from federal, state and local governments.

“I think it’s absolutely fantastic news. It’s going to be a big deal for the city,” said former Mayor Harry Winthrop, who will re-assume mayoral duties on Dec. 4 after winning back the City Council seat he lost two years ago. “This will create jobs and opportunities for people.” Winthrop said the city’s staff “worked very hard to put the final elements in place.”

As envisioned, the 33,600- square-foot Sheffield building will be converted into a “co-work and office complex to assist entrepreneurs, innovators and small businesses” working in the marine, climate change, environmental, digital and defense sectors, as well as allied industries, including underwater technologies and cybersecurity.”

The former school building will provide a wide range of modern, high-tech office suites, rooms and meeting spaces “with the latest technology connections available.”

Tax credit programs such as the one approved for Sheffield were created by Congress and some state agencies to encourage private investment in projects and businesses that provide a public benefit to communities. To accomplish this goal, private capital is raised to fill financing gaps when other public and private funding sources are insufficient or unavailable, according to U.S. Bancorp.

Further, according to a Commerce Corporation press release, such credits are used when “a real estate project cannot raise sufficient funding, or is at risk of locating in another state.” In that case, Rebuild Rhode Island can “fill the financing gap” with redeemable tax credits covering up to 20 percent – and in some cases 30 percent – of project costs. Qualifying projects include “commercial office, industrial, residential, mixed-use developments, ground-up construction and historic rehab” efforts that cost a minimum of $5 million.